WASHINGTON – President Barack Obama released tax forms on Friday that reveal he will probably pay a higher tax rate on lower income than likely Republican opponent Mitt Romney in 2011, adding fuel to a Democratic election-year effort to raise taxes on the wealthy.
Obama paid an effective tax rate of 20.5% on income of $789,674 last year, the White House said. Romney has estimated he will pay a 15.4% tax rate on income of $20.9 million, though he has not filed his return yet.
Obama and his fellow Democrats have spent much of the week touting the “Buffett Rule,” a plan to ensure that millionaires like Romney pay at least 30% income tax.
The proposal has almost no chance of overcoming Republican opposition in Congress, but it will provide ammunition for the Nov. 6 presidential and congressional elections as Democrats say their rivals are more concerned with protecting the wealthy than addressing the concerns of less affluent Americans.
Obama’s campaign also aims to exploit the fortune Romney earned over decades as a private-equity executive, valued at up to $250 million.
Campaign manager Jim Messina highlighted the tax shelters and offshore accounts Romney has used to manage his money, and challenged him to release tax returns that would shed more light on his career as head of investment firm Bain Capital.
“What does he have to hide?” Messina said in a statement. “Why did he open a Swiss bank account instead of an American bank account and establish a corporation in Bermuda instead of on our shores?”
Romney pays a lower tax rate than Obama because the Byzantine U.S. tax code favors investment income over wage income, and his lawyers say he fully complies with the law.
A Romney spokeswoman called the debate over his personal wealth irrelevant and said he would release his 2011 tax form when it is filed.
“It’s no surprise with the worst job creation record in modern history that President Obama would try to distract Americans from the real issues with a series of sideshows,” spokeswoman Andrea Saul said.
Romney’s anticipated 15.4% income tax rate is roughly in line with that paid by most Americans, but it is far below the top income rate of 35%.
For 2011, about 46% of Americans will pay no federal income taxes, most of them because they are too poor, according to the Tax Policy Center, a think tank.
Counting all taxpayers, the average rate is 11%, according to the Tax Foundation, another think tank.
Effective tax rates vary wildly from person to person due to the maze of deductions, exemptions and credits that have been carved out since the last overhaul 25 years ago.
The Obamas earned about half of their income from his presidential salary of $400,000, while the remainder came from sales of Obama’s books, the White House said.
They donated $172,130, about 22% of their adjusted gross income, to 39 different charities, the White House said. The biggest beneficiary was the Fisher House Foundation, a scholarship fund for children of soldiers who have been killed or disabled, which received the after-tax proceeds from the sales of a children’s book Obama published after he took office – a total of $117,130.